Measure right

I was reading an article about one of the most hated companies in Finland. Caruna, company taking care of electricity distribution. The history is interesting, but irrelevant here.

The thing that was interesting in the article was about measuring the business. They knew that people hated them. That went all the way to level of parliament. And that was crucial. Because Caruna is operating in the business, which is regulated by the parliament. Old measures and Key Performance Indicators (KPI) had taken them where they were, in trouble. Caruna needed some insight to what the situation was, in order to make smart moves in the future. They had to have the courage and wisdom to ask new questions. In order to do this, they asked research organisations for offers on innovative research.

Caruna got a totally new approach to how to learn what, and even more importantly why, people were feeling. The important lesson here is that they needed to walk away from the old measurements in order to build successful future. The ”old school” KPI’s take you only so far. In contemporary world the standard business measures have two major problems. The first one is that they see the world in a very mechanist way. That leaves most of the human factors out of the picture. The second problem is that using the old measure often leads to limited thinking. The more we have been looking at the figures, the less likely we are to look at alternative ways, reasons and implications. It does not have to be like that. Making a habit of bringing in new approaches or looking at the core figures from new standpoint will help you to learn more about your organisations, your customers and people you serve.

We cannot manage a huge amount of information with true in-depth understanding. We are have the fear of missing out. So giving up some measurement is not easy. Yet we should do that every time we bring in some new measurement. At each level we should have some 2 to 4 KPI which we monitor constantly and year over year. And the we should have a couple of measures, which we use for a couple of years. And then we should let them go, or if they turn out to be truly vital on long term, then we need to think which of the old permanent measures we let go. And let go you must. If you have 20 KPI’s, then they all become irrelevant and lose their power!

When you create, at each level of the organisation, 3 KPI’s on each of the following, then you are on right, prosperous and well being, track. The first and easy one is the financials. What is the KPI which has value and which people truly can have on impact on in their work. That is the KPI #1. Your KPI #2 is personnel well being and satisfaction. After all, like Richard Branson has said ”take care of your people and they will take care or your customers”. The last KPI, #3, you need to have is customer satisfaction, either external or internal. With these you already get a huge set of information, when you take ratios like KPI#1 / KPI#2 or KPI#1 / KPI#3. And so on. When you put add on top of these a few contemporary measures, you will have all the information you need. Measures have also meaning to your people, which leads to better performance. Right measurement have value to your best talents. Hence your organisation will be able to keep and develop the best in the industry.

Get your people to create and innovate measures. Some of those measures will be almost useless. There is value in all of them, as they help people to learn to find better ones. Don’t be afraid to let go of a measure very fast, when you all see that it has no true value. Learning new things through new measures is the key element of all successful organisations. Measures are the source of learning and preparedness for changes, your organisational resilience. We are living in a world, where the cycle of change is shorter than ever. Your measurements need to give you tools to lead your through the stormy weathers of the world. The more you use variable measures, the easier it becomes to you to see the changes in the environment.

They say that in flying there are only three things that really matter; fuel, air under wings and direction. If any of those is missing, the end is catastrophe. In organisational context those 3 are employees, customer and money. Use your measuring system for making sure that you manage them right. In flying, even there are only 3 things to look after, they have a huge amount of measures and tools, just to ensure that they key measures are not giving clouded information. This is the purpose of your variable measures. They ensure that the core KPI’s give you right information.

There is one thing, which often limit our ability to use measures right! That is our emotional structure. We (because our brain does not like changes) tend to focus on only very limited volume of information. And we interpret them in the way we have done in the past. It is all about the culture you have and create. In creating culture you use your emotional intelligence, your personality. You need to have the culture of curiosity, learning and openness in order to use measurement results right. Numbers don’t lie, but they also don’t deliver anything until our mind gives them meaning. Give meaning and you get results!

When you want to learn more about your business and want to take it to improvement path, then you can use external specialist. That is the tool all the worlds leading organisations do. Today, in Finland, you can do it through using ELY-analysis services. There you get an external specialist to work with you. If you’d like to know more, send me an email. I will help you (at no cost) to take the first steps!

Kari I. Mattila, measurement lover, emotional intelligence trainer